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Texas Commercial Hotel Sector
Commercial real estate investors are focusing on smaller markets and smaller properties as the commercial hotel sector is nearing the top of the investment cycle. While the Texas metro markets are seeing peak levels in occupancy and property prices with little margins for growth, there may still be room for hotel acquisitions in the Amarillo and surrounding West Texas rural markets. Buyers usually pay less per room for these properties and spend more on capital improvements after purchasing these properties. There are return on investment incentives for doing renovations. This is especially true in the current Texas oil boom.
Increasing Hotel Demand in Oil & Gas Boom
New oil and gas explorations are certainly and rapidly changing the West Texas landscape. Sleepy little towns like Snyder, Texas are being transformed into petroleum and industrial centers.
Likewise it is very difficult to find a hotel/motel vacancy in the midst of a Texas oil boom. “Follow the money” is a popular catchphrase in the movie All the President’s Men but it is also good advice for the lodging investor in West Texas.
When the bubbling of that Texas crude comes up, the oil and gas industry needs boots on the ground. Rooms are gobbled up as quickly as they become available and usually the tenants stay for a long time. What would be considered budget hotel rooms in Midland, Texas are considered the third most expensive rates in Texas.
Three Main Categories of Hotels
- Limited Service: Firstly this service offers meeting rooms, a fitness area, and a swimming pool. They do not offer room service, concierge, or an on-site restaurant. Operations in this hotel are predictable as compared to a full service hotel.
- Full Service: This service offers a whole lot more than limited service hotels. Beginning with large meeting rooms, banquet halls, on-site restaurants, concierge services, a spa, and retail shops. Operations are dependent upon the quality of its onsite services.
- Budget: Finally this service offers little to no amenities for its guests. The purpose of these hotels are to provide for the most basic needs of a night stay.
Mays Provides the Background Comps
Mays provides vital information to help you make an informed decision regarding your commercial real estate investment. We give you useful data about the construction of the property. Such as the year the property was built, if there have been any updates to construction, as well as unit sizes. We also provide ratios of rental and vacancy rates to ensure the location is a proper investment for potential buyers. In addition, Mays locates information about licensing and operating expenses of the property and looks out for possible competition in the surrounding area. Along with this, we provide a variety of reports:
- Market Reports: Firstly detailed research on market shifts, changes in technology, and the economy near the property.
- Submarket Reports: Data on specific submarkets or neighborhoods within a specific metro market.
- Metro Reports: Historical trends that are a foundation for any precise market analysis.
- Rent Comps: Rent comps help investors evaluate property performance as compared to its competitors.
- Sales Comps: See properties similar to the one you want and find out what they have sold for before making financial decisions.
- New Construction Comps: All in all stay informed about upcoming, completed, or current projects that are under construction in the area they you are looking to purchase property.
Information and Resources for Mays in Amarillo, TX
For more information about the resources we offer commercial real estate property investors, see Mays Market Reports and Mays Property Reports. Or if you need specific information or have a question, visit our Question and Answers or Contact us.
Anderson, B. (2018). Hotel Buyers Hunt for Yield. [online] National Real Estate Investor.
Formigle, I. (2016). The Definitive Guide to Commercial Real Estate Property Types.
Marsh, A. (2016). The 6 Types of Commercial Real Estate Properties.
Maus, Warwick, Matthews. (2018). Why Hotels Are the Perfect Commercial Real Estate Investment.